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FTC approves Google/DoubleClick deal
- — 21 December, 2007 08:33
The U.S. Federal Trade Commission will not try to block Google's acquisition of online ad-serving vendor DoubleClick, the agency said Thursday.
The commission voted 4-1 to approve the deal after an eight-month investigation. "After carefully reviewing the evidence, we have concluded that Google's proposed acquisition of DoubleClick is unlikely to substantially lessen competition," the majority wrote in a statement.
The commission downplayed concerns brought by some privacy groups. Privacy concerns are "not unique to Google and DoubleClick," and "extend to the entire online advertising marketplace," commissioners wrote.
Google, the provider of the most widely used search engine, announced in April that it planned to acquire ad serving giant DoubleClick in a US$3.1 billion deal.
The commission examined several factors and concluded that the two companies are not direct competitors, the FTC said in a news release on Thursday. The agency found that competition in online ad-serving markets is vigorous and likely to increase.
The agency will closely monitor the ad-serving space, however, commissioners wrote. "The markets within the online advertising space continue to quickly evolve, and predicting their future course is not a simple task," the majority wrote. "We want to be clear ... that we will closely watch these markets and, should Google engage in unlawful tying or other anticompetitive conduct, the commission intends to act quickly."
Google, which faces a similar examination before the European Union, praised the FTC decision.
"The FTC's strong support sends a clear message: this acquisition poses no risk to competition and will benefit consumers," Eric Schmidt, Google's chairman and CEO, said in a statement. "We hope that the European Commission will soon reach the same conclusion, and we are confident that this deal will deliver more relevant ads for consumers, more choices for advertisers, and more opportunities for Web site publishers."
Google will remain committed to user privacy, Schmidt added. "For us, privacy does not begin or end with our purchase of DoubleClick," he said. "We have been protecting our users' privacy since our inception, and will continue to innovate in how we safeguard their information and maintain their trust."
The groups may look into filing a legal challenge to the deal, said Jeffrey Chester, CDD's executive director.
"The Federal Trade Commission sidestepped its responsibility today when it approved the merger of two companies whose new, extended data-collection reach will give it unprecedented access to track our every move throughout the digital landscape," Chester said in an e-mail. "By permitting Google to combine the personal details, gleaned from our searches online and YouTube downloads, with the vast repository of information collected by DoubleClick, the FTC has sanctioned the creation of a new digital data colossus."
It's the FTC mission to protect privacy, Chester added. "Despite the FTC's claims, privacy is most certainly an antitrust issue," he said. "A key component of the online market dominance that companies such as Google have achieved is the aggregation and analysis of consumer profiles, including the merger of far-flung data sets and vast data warehouses that only a handful of companies now have at their disposal."
FTC Commissioner Pamela Jones Harbour voted against the deal, saying she disagreed with the majority's view on the direction of the ad-serving market. The two companies have the potential to be competitors in the third-party ad-serving tools market and other areas.
"I am convinced that the combination of Google and DoubleClick has the potential to profoundly alter the 21st Century Internet-based economy -- in ways we can imagine, and in ways we cannot," she wrote.
And Commissioner Jon Leibowitz, while voting with the majority, said the deal raised serious competition and privacy issues. Those issues, "though in part brought to light by the deal, clearly transcend it," he wrote.
In late May, Google announced that the FTC was examining the deal for potential antitrust problems. The FTC can rule that a merger raises antitrust issues, and the agency can recommend remedies. If the merging companies don't reach a settlement with the FTC, the agency can see an injunction against the merger in a U.S. court.
Leibowitz, in November, said the agency was reviewing the case on antitrust, but not privacy, grounds. The privacy groups have argued, however, that the privacy issue is related to antitrust partly because of the competitive edge Google would get in targeting advertising to specific people.
In December, EPIC and CDD filed a new complaint, asking FTC Chairwoman Deborah Platt Majoras to recuse herself from the case. Majoras' husband works for a law firm that is advising DoubleClick, but DoubleClick and the FTC said that the Jones Day law firm hasn't represented the company before the FTC.